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Let's discuss the industry's outlook post-NPD

Amir0x

Banned
In the NPD topic user jcm posted the following chart showcasing the YOY and GOG comparisons.

People always talk about contractions and the like, and we knew this gen would face some - handhelds were shrinking, and there's no Wii successor. But the stark reality of what we may be facing in the upcoming years is quite frightening for someone who loves gaming as much as I do.

Can an industry sustain huge titles if only one platform is even remotely successful? Hell, throw PC into that and say PS4+PC, for example. Or it could be XBO+PC, whatever your imagination leads you. Would that be enough to support the spiraling budgets? One of the reasons PC+360+PS3 was so attractive against a Wii was because they had three viable systems to port to all which would return decent sales. And even in that environment, we had an unprecedented amount of studio closures.

What would happen in an industry where we don't even have a secondary successful console and the first and only console that is successful barely hits 90 million by the end of its run?

Monthly Basis
Code:
Year Over Year
         2014     2013    % Change
XB1       141             
360        48      281     -82.92%
PS4       271             
PS3        54      201     -73.13%
WIU        49       57     -14.04%
WII                100   
3DS        97      145     -33.10%
NDS                 70   
PSV        17       35     -51.43%
PSP                 10   
                        
Family                  
MSFT      189      281     -32.74%
SONY      342      246      39.02%
NINT      146      372     -60.75%
                         
HAND      114      260     -56.15%
CONSOLE   563      639     -11.89%
                        
Gen over Gen                    
Console  2014     2007    % Change
360                294     
PS2                299     
WII                436     
PS3                244     
TOTAL     563    1,273     -55.77%
                        
Handheld 2014     2008    % Change
NDS                251     
PSP                230     
Total     114      481     -76.30%
Weekly Basis
Code:
Year Over Year
         2014     2013    % Change
XB1     35.25          
360        12     56.2     -78.65%
PS4     67.75          
PS3      13.5     40.2     -66.42%
WIU     12.25     11.4       7.46%
WII                 20      
3DS     24.25       29     -16.38%
NDS                 14      
PSV      4.25        7     -39.29%
PSP                  2       
                        
Family                  
MSFT    47.25     56.2    -15.93%
SONY     85.5     49.2     73.78%
NINT     36.5     74.4    -50.94%
                        
HAND     28.5       52    -45.19%
CONSOLE140.75    127.8     10.13%
                        
Gen over Gen                    
Console  2014     2007   % Change
360               58.8    
PS2               59.8    
WII               87.2    
PS3               48.8    
TOTAL  140.75    254.6    -44.72%
                        
Handheld 2014     2008    % Change
NDS              62.75   
PSP               57.5    
Total    28.5   120.25     -76.30%

The questions as follows:

1. Is this a true sign of things to come, or are we still too early to tell? Is this chicken little nonsense, or should we start getting prepared for how to salvage what's left?

2. What potential ideas could change this industry's trajectory? Some new form of social gaming? Some console/handheld hybrid? VR? What do you believe can capture people's imaginations and share with them the importance of gaming as a medium?

3. Would you be happy with an industry where the big budget games have almost entirely evaporated outside of a few per year, but the rest was dominated by indies? Why or why not?
 
we are going to be stuck with iphone/android games.

Candy Crush rakes in $650,000 a day
flappy bird makes $50K a day

Japan mobile market is bigger than US:
http://online.wsj.com/news/articles/SB10001424052702303330204579250090182968948

We are left with 4-5 publishers. Almost all of them are in weak shape with just one big hit a year. Sooner or latter they will go towards smaller budget, less risky route. Console sales are mostly determined on the launch day sales, if it fails then there is no way recover. On mobile games they can go back fix it, continue to support and stay alive.
 
Of course last gen console sales are down... Next gen was announced early 2013, not many gamers are going to buy a dying 7+ year old system
 
Of course last gen console sales are down... Next gen was announced early 2013, not many gamers are going to buy a dying 7+ year old system

Aye, but as far as I'm aware, the contraction we're looking at is dramatically larger than past gen transitions. Is it due to the fact that we've had a longer cycle than usual in your estimation?
 
Yeah I think it's too early to say. Even if the industry is about 25% smaller than last gen, it won't be the end of it.
I for one would welcome some smaller budget games.
 
There's no question it is consolidating and has consolidated. People keep saying it is too early to tell, but it really isn't. Look at the carnage in the development sphere. Look at the contraction of publishers. Hell, look at a release calendar. This is not an expanding industry.

Except for our friends in the indie sphere. God bless 'em.
 
There's no question it is consolidating and has consolidated. People keep saying it is too early to tell, but it really isn't. Look at the carnage in the development sphere. Look at the contraction of publishers. Hell, look at a release calendar. This is not an expanding industry.

Except for our friends in the indie sphere. God bless 'em.

It'll be an interesting change in dynamic for sure. Kickstarter will suddenly gain even more prominence too I think
 
Still too early to say imo. PS4 is still supply-constraint in many places in the US. Wait until March and if system sales for PS4/Xbox aren't higher after inFamous/Titanfall come out, then start to worry imo.
 
Can an industry sustain huge titles if only one platform is even remotely successful? Hell, throw PC into that and say PS4+PC, for example. Or it could be XBO+PC, whatever your imagination leads you. Would that be enough to support the spiraling budgets? One of the reasons PC+360+PS3 was so attractive against a Wii was because they had three viable systems to port to all which would return decent sales. And even in that environment, we had an unprecedented amount of studio closures.
I don't see how PS4+XBO+PC isn't still a viable path. There are millions of PS4s and Xbox Ones out there. And they cost hundreds of dollars more than the PS3 and 360 entries from last year, so they should be selling less overall.

Looking at your numbers, I'd be interested in a similar chart that compares the PS3/360 generation to PS2/Xbox sales in a similar time frame. It's harder because 360 came out a year earlier and had Gears by the time PS3 came out, but all the same. Or, give us these same charts but use revenue ($) instead of units.

EDIT: I guess the GOG gives an idea of that, but Wii was much lower priced than Wii U, PS2 was $200 or so, 360 had Gears, and PS3 was probably looking at the same "supply catch up" that PS4 showed. PS3 in the following months dropped off big time because it didn't have a game like Gears to bring people to the console. PS4 and XBO need that game to come quickly. We'll see if Titanfall and Infamous help.

I still think it's early to hit the panic button.
 
I don't really see a problem. As you pointed out, PC's viability as a release platform has seen a huge surge (and is still growing fast) and I don't really think that only having one super-successful console means that big publishers are in trouble. Does it really matter if the masses are divided between two consoles or if they are mostly on one?
 
Is still to early to say, but if it is what I fear is happening then console gaming's in for a super rude awakening.

Xbox One is not giving Microsoft investors any reason to keep in the console business. It's not Wii U bad but then again Nintendo isn't considering dropping gaming any time soon.

PS4 hardware sales look solid but the software sales aren't impressive either. We all know what's happening with Nintendo.

We still need to wait and see, but if software sales resemble closer to what we've seen this generation already then dedicated hardware gaming's in trouble.
 
Yeah I think it's too early to say. Even if the industry is about 25% smaller than last gen, it won't be the end of it.
I for one would welcome some smaller budget games.

we could be seeing the end of $60 mega budget games. If console games dont separate themselves far enough from the $5-$10 ipad/appletv(rumored gaming version).. it is going to make it even worse.

Can Ubi/Activision/EA survive making $10-$20 games ?.
 
It'll be interesting to see what the PS4 baseline will be. We could already start to get a glimpse of it with the February NPD since people are reporting to see it in stock now.
 
Looking at these numbers (and software too...maybe, even more them), I feel that Nintendo's plan of unifying home and handheld R&D, with having both consoles as "brothers", by sharing games / OS / functions, with iOS and Android as main example mentioned by Iwata himself is even more justified, especially if combined with NNid becoming their "platform" and talk of discounts for loyal customers, since game prices are seriously affecting retail sales (of course, it needs to be executed in the best way possible, and that's what needs to be seen).

That sounds like a possible way to go for the future, and PlayStation Now is following a similar, but much more extreme route (PlayStation games being available on ALL hardwares, even not-Sony, and it's a service), but I don't know how paying a monthly fee which can't certainly be like 40-50 per month, but much less, can recoup costs of development for the big companies (and budgets are still increasing ;_; ). As a supplementary service (think about movies: cinema tickets & DVD/ Blu-Ray + Netflix / Amazon Video) compared to current retail / digital system? Perfect! Great! As a substitute of the current retail / digital system? Eeeeeeeeeh.
 
All I can say is, I really need to step it up on my retro handheld collection. It seems that may be the only way to avoid getting stuck with mobile games on the go sadly.
 
Industry contractions are happening and I don't think anyone can deny them. The Wii audience or that which typically buys Nintendo consoles is gone, and the audience for dedicated handheld devices has moved onto smartphones/tablets.

If we just look at PS4 and XB1, the former seems to be in good shape. As far as Xbox goes, I'm sure the price plays a large part in it but I am curious if the industry has contracted enough that suddenly there will only be one successful platform. This isn't good if that's the case given the ballooning budgets of games and all of the publisher/developer deaths of the previous generation.
 
I don't really see a problem. As you pointed out, PC's viability as a release platform has seen a huge surge (and is still growing fast) and I don't really think that only having one super-successful console means that big publishers are in trouble. Does it really matter if the masses are divided between two consoles or if they are mostly on one?

It wouldn't matter, IF - and this is a big IF - those users all consolidated on one platform. In other words, if instead of selling 80 million the system sold 140 million.

If those other users simply don't buy the other console and skip out altogether, and the remaining system settles at 90 million, then of course it matters. It means a massive audience has left and is no longer buying games. It means instead of your games selling 1.5 million on one platform and 600 thousand on the other, you may just be stuck with 1.5 million.
 
Killing "B" tier developers or absorbing them and then killing them and making the need for everything to be AAA...The industry did this to itself.
 
I wonder if having a gen that was TOO long caused this.

Unlike the usual cross over period, the HD twins are still quite expensive. I definitely think there's still a market there, but they've tapped all they can at the current price point but I also don't think Microsoft or Sony want to start losing money on the consoles.
 
Until we know digital sales it is impossible to know the full picture. There is factual evidence of games releasing and a third of their sales coming from digital sales (Fire Emblem Awakening opened with 63,000 digital sales). The PC market never gets brought up in these sort of discussions yet almost all of its sales come digitally and it is just accepted. It's not unreasonable to think PSN and XBL and eShop are gaining similar traction.
 
Aye, but as far as I'm aware, the contraction we're looking at is dramatically larger than past gen transitions. Is it due to the fact that we've had a longer cycle than usual in your estimation?

I'd say there are a variety of factors. I think one of the major ones is that console pricedrops for the PS3 and 360 have been few and far between. Why are neither of those consoles under $200 officially? For many casual gamers that's a great entry point for them, but the console prices aren't dropping. Those consoles are grinding to a halt at their current price point because most people that want them at that price have already bought them. The lowest official price for the PS3 right now is $270. Seven years after its release and the console is $270.
 
Too soon.

New-gen hardware: We have supply problems with PS4. We have a platform facing perception problems (too expensive, rocky PR) in XBO. PS4 sales will be steady and likely a bit better once the supply problems subside, and I think XBO breaks through a bit starting in March. WiiU will continue to meander, and losing the Wii crowd could lead to some contraction.

Last-gen hardware: Anomalously long generation means more rapid declines for hardware sales. X360 approaching 9 years now, PS3 approaching 8. Combination of saturation and pricing that remains high has established a bottom. Generational transition will be faster this time.

Handhelds: 3DS showing signs of struggling again, but Nintendo seems to find ways of getting it through rough spots. Vita is toast, though; I suspect that the hardware revision won't be enough to resurrect it. PS4 Remote Play and indie games aren't enough of a value proposition to get consumers to spend triple digits on (yet) another device.

All of that said, using January data to make industry predictions is a tough call. New software releases were pretty uncommon, and without games to drive hardware sales... interest wanes. Let's see how consumers react when more software gets released at retail.
 
Looking at these numbers (and software too...maybe, even more them), I feel that Nintendo's plan of unifying home and handheld R&D, with having both consoles as "brothers", by sharing games / OS / functions, with iOS and Android as main example mentioned by Iwata himself is even more justified, especially if combined with NNid becoming their "platform" and talk of discounts for loyal customers, since game prices are seriously affecting retail sales (of course, it needs to be executed in the best way possible, and that's what needs to be seen).

That sounds like a possible way to go for the future, and PlayStation Now is following a similar, but much more extreme route (PlayStation games being available on ALL hardwares, even not-Sony, and it's a service), but I don't know how paying a monthly fee which can't certainly be like 40-50 per month, but much less, can recoup costs of development for the big companies (and budgets are still increasing ;_; ). As a supplementary service (think about movies: cinema tickets & DVD/ Blu-Ray + Netflix / Amazon Video) compared to current retail / digital system? Perfect! Great! As a substitute of the current retail / digital system? Eeeeeeeeeh.

Nintendo was right in not trying to copy Sony or MS and make it the "console triplets." It's not enough to just release a box, they'd have to do lots of brand building and it would take time to build that name for themselves and court those audiences. Nothing wrong with that in itself, but when you see how that actual market is smaller, it's not worth jumping into the ring to fight for a share of a shrinking pie.

So they went another way with their console, and it sucked for lots of other reasons. I bet if they took a different approach, a third approach to the console, they could have fared slightly better. It's good that they are trying to branch out into other industries, whether it works remains to be seen.

Services are very important now for everyone. Consolidation isn't just in gaming. Hell, Comcast just bought Time Warner. "Content" delivery is also important and that's really Valve's wheelhouse. Realizing efficiencies in NIntendo "new" gaming hardware business through a unified architecture doesn't really solve that. I really hope their answer is a more robust sales force and promotions.
 
I don't see how PS4+XBO+PC isn't still a viable path. There are millions of PS4s and Xbox Ones out there. And they cost hundreds of dollars more than the PS3 and 360 entries from last year, so they should be selling less overall.

Look at Tomb Raider. It needed 5 million copies sold to break even ie. cover the costs of developing it. The game was well recieved, it was released on everything not made by Nintendo, and it was still a financial failure. Square Enix are doubling down - hoping a follow up will have better success. But it will cost more to develop for PS4 / one, and they will have a smaller install base when it launches. What makes you think it is still a viable path?
 
The fact that Capcom's only (?) announced game for next gen is a procedurally generated F2P game is telling. Nintendo's outpt is about half of what it was back in the mid 2000s. Heck, overall Production of games for many companies on consoles is just down overall and it seems it's consolidating at the biggest titles, which means more than ever one game flopping can screw a dev or publisher over. Wii U, Vita, and even 3DS failing to sell even remotely as well as their predecessors is leaving a huge gap in hardware sales too.
 
It's too early to tell. All this is based of 1(!) month of NPD. PS4 + One sold 410k. 360 + PS3 first Jan was 490k. So that's not really far away. And the picture isn't clear cause this is a comparison with 3? (ps4, ps3, 360) supply constrainet consoles. So the numbers doesn't tell too much cause if one of the 3 mentioned consoles would have had more supply ready the numbers would be much worse (ps3, 360) or much better (ps4).
Another point is that the One is over 1.1 million units ahead of the 360 and the january difference is ~100k.
So even if this difference prevails it would take 11 months for the One to fall to 360 sales.
 
I think it's still a tad early. Between the utter flop of the WiiU, which is Nintendo's fault. The mishandling of the Xbox One, which is Microsoft's fault. And the still unknown demand for the PS4, which is because of Sony. I think we lack data on the PS4. When demand meets supply then we have an answer for that. I really don't think it's reasonable to expect so much from the first year of consoles. They've never been good. How about we hold the predictions off until at least E3? If it's all going down the drain we will witness it first hand there.

On unsustainable game budgets. Well, they'll (we'll) learn that either the hard way, or manage it before it truly swallows everything. Trying to gauge everything in absolutes when things are in flux will lead to a lot of worry over unsuspecting events.

Oh, and
Revenue and gross profit > Straight sales numbers.
 
The questions as follows:

1. Is this a true sign of things to come, or are we still too early to tell? Is this chicken little nonsense, or should we start getting prepared for how to salvage what's left?

2. What potential ideas could change this industry's trajectory? Some new form of social gaming? Some console/handheld hybrid? VR? What do you believe can capture people's imaginations and share with them the importance of gaming as a medium?

3. Would you be happy with an industry where the big budget games have almost entirely evaporated outside of a few per year, but the rest was dominated by indies? Why or why not?

1. Much too early to tell. Last gen was structured as such that even the "losers" made a ton of revenue. Every XBO is profitable out of the box, they have a decent attach rate, and I expect to see both new systems add about 50-100k in February and March with tax refunds and new releases.

That said, nobody should expect a sea change and anyone to sell 150 million consoles. The fun+value+interest combination is just not there for a lot of people. None of the three consoles has a clearly defined audience beyond people who bought the last system. To crack 100m now you are going to need something more compelling than a more powerful box with a normal controller. Add to that with Pokemon out 3DS is nearing saturation; Vita's only real hope in the US is Minecraft but the iOS/Android version may be "enough" for most people - and isn't "good enough" the biggest problem the industry as we know it faces right now?

2. The most important thing in the past decade for games has been simplification. The second most important has been multiplayer/social gaming (not necessarily "social games".)

Something like VR isn't going to make a difference beyond a small niche for a little bit (see also: Kinect & Move.) It is an added expense that renders the most expensive, dominating part of the living room pointless. It also blocks the user out from contact with others physically nearby. That's the idea, but that makes it a novelty for most. I'm a pretty "core" player, but I could never do even 50% of my gaming in VR, for example, because I often play when my wife is working and my dog will destroy something if left alone. Is it anecdotal? Sure, but it isn't anything different from what most of the people who can afford and would consider purchasing something like an Oculus Rift live in daily.

A new concept has the possibility to be the Wii, the DS, the smartphone - but it needs to be cheap, invisible and unintimidating. Which coincidentally means it'll be uninteresting to most users of this forum, but I'm willing to deal with a Wii to get a Mario Galaxy and a Xenoblade, if you see what I mean.

3. I'm fine with that - with the caveat that more indies who have found some success try different, ballsy stuff. I love 2D platformers, but I don't need any more of them for a while. Seeing the Joe Danger team making something far more intriguing in No Man's Sky is the direction I want to see indies go in.
 
The fact that Capcom's only (?) announced game for next gen is a procedurally generated F2P game is telling. Nintendo's outpt is about half of what it was back in the mid 2000s. Heck, overall Production of games for many companies on consoles is just down overall and it seems it's consolidating at the biggest titles, which means more than ever one game flopping can screw a dev or publisher over. Wii U, Vita, and even 3DS failing to sell even remotely as well as their predecessors is leaving a huge gap in hardware sales too.
They also had Dead Rising 3 at xbox's launch.
 
I think last generation was a little bit of a bubble. The Wii's mainstream success was a fad. And the HD twins did exceptionally well because they were for a long time the best streaming boxes/blu-ray players. It allowed the AAA model to fester which killed rational development practices by simply outspending them in advertising. The generation also went on for too long.

Now we have sub $100 streaming solutions the blue ocean has completely migrated to mobile/tablet (which also will have a problem when device adoption is complete). I'm not sure if PS4 adoption will stay as strong throughout the year because of a mixture of lacking highly marketable titles and lethargic adoption past the hardcore consumer.

The worst thing that could happen (and that I already see happening) is publishers only making "sure" bets, which currently means graphically impressive shooters. It could turn into a spiral of costumer refusal and publisher making even "surer" bets.

Indies will be fine and so will true mid sized publishers (Paradox) that cater to a specific niche. AAA is currently creatively and soon possibly financially dead if the PS4 doesn't pull PS2 numbers.
 
Look at Tomb Raider. It needed 5 million copies sold to break even ie. cover the costs of developing it. The game was well recieved, it was released on everything not made by Nintendo, and it was still a financial failure. Square Enix are doubling down - hoping a follow up will have better success. But it will cost more to develop for PS4 / one, and they will have a smaller install base when it launches. What makes you think it is still a viable path?
I was simply stating that if companies thought the PS3+360+PC market was viable, they should still consider the PS4+XBO+PC market as a similar opportunity. There isn't anything in the numbers that indicates to me that PS4 and XBO are markedly weaker than their predecessors in selling potential.
 
Killing "B" tier developers or absorbing them and then killing them and making the need for everything to be AAA...The industry did this to itself.

I'd say there are a variety of factors. I think one of the major ones is that console pricedrops for the PS3 and 360 have been few and far between. Why are neither of those consoles under $200 officially? For many casual gamers that's a great entry point for them, but the console prices aren't dropping. Those consoles are grinding to a halt at their current price point because most people that want them at that price have already bought them. The lowest official price for the PS3 right now is $270. Seven years after its release and the console is $270.

I kind of wonder sometimes what would have happened if the 360 and PS3 didn't target the specs that they did. They still wouldn't be like the Wii, but if they had been less of a jump, then they might have at least slowed the acceleration of development costs. That could have changed a lot, IMO.
 
I wouldn't worry.

The PS4 at the very least will do just fine. And one console dominating wasn't a problem for the PS1 or PS2.

Last gen consoles declining fast is a given and probably a good thing? The new consoles are off to an explosive start so its a good thing that people are aiming for next gen faster, no? There's also the fact that the last gen consoles are still quite pricey and haven't had a price drop in a while.
 
I wouldn't worry.

The PS4 at the very least will do just fine. And one console dominating wasn't a problem for the PS1 or PS2..

It wasn't a problem for PS1 or PS2 because games didn't cost an arm and a leg to make back then. If everybody was happy with Gamecube graphics right now, we'd be sitting pretty.
 
Aye, but as far as I'm aware, the contraction we're looking at is dramatically larger than past gen transitions. Is it due to the fact that we've had a longer cycle than usual in your estimation?

personally this is what I think, let's get a few more NPD before saying the sky is falling, I think.
 
It wasn't a problem for PS1 or PS2 because games didn't cost an arm and a leg to make back then.
The PS4/XB1 are designed the way they are (x86 CPU, off-the-shelf GPU architecture) specifically to keep production costs down, at near the same level as last gen.
 
I wouldn't worry.

The PS4 at the very least will do just fine. And one console dominating wasn't a problem for the PS1 or PS2.

Last gen consoles declining fast is a given and probably a good thing? The new consoles are off to an explosive start so its a good thing that people are aiming for next gen faster, no? There's also the fact that the last gen consoles are still quite pricey and haven't had a price drop in a while.
Dev costs rising and dev time being longer is a huge problem. You can't compare 2001 to 2014.

Single succesful console can't keep the industry afloat.
 
It's far too early to start drawing any conclusions for the next generation of consoles. All one can really say is that the 7th generation went on too long and Nintendo were stupid to release a 7th gen console in the 8th gen.

Until this time next year it will be tough to say with any level of certainty what's to come.

As for the doom mongers who all happen to sport Nintendo-related avatars, I think they will be eating their words by the end of the year. We're really only getting warmed up, and when big hitters Uncharted and Halo are released we'll see how dedicated gaming hardware is really faring.

Also, both of the new consoles are selling on hype, and hype alone. Neither has a killer app or a particularly decent library. The first landmark games for both consoles are still a month away and after that there is nothing dated. Both MS and Sony need to get their act together and put release dates onto their titles. The pressure is really on MS though, for Sony while demand exceeds supply they can keep quiet and have a huge wave of information once demand begins to wane. On the basis that the consoles are selling without a killer app, I would say they are doing pretty well.

On development budgets, this generation will be better than the previous one. The leading platforms (PC, PS4, Bone) all share the same basic architecture. PC and PS4 architecture is almost identical. It means the development process can be streamlined and one team can create games for all three platforms simultaneously rather than having to double up like early last gen when the PS3 was causing all kinds of headaches. I also believe that having one large userbase like the PS2 would allow for the return of mid-tier games. Part of the reason the PS2 had such an amazing library (outside of err, New Zealand, apparently) was that there were enough fans of a given genre within the 100m userbase to release titles without too much marketing and without too many extra costs. In the 7th gen the PC/360/PS3 architectures were so different that creating a mid-tier game was never viable because targeting the widest number of users meant a simultaneous release on three platforms, but by then the costs were so big that the project wouldn't make any money. With PC/PS4/Bone sharing architectures it does pave the way for mid-level games to make a come back, and for genre diversity to increase again as the cost of targeting the widest userbase is basically the same as making the game, aside from QC on each of the major platforms.
 
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